OpenAI raises $8.3B at $300B valuation

Secondly, this is looking very risky: they are at the bottom of the value chain and eventually they'll be running on razor thin margins like all actors who are at the bottom of the value chain.

Anything they can offer is doable by their competitors (in Google's case, they can even do it cheaper due to ow ing the vertical which OpenAI doesn't own).

Their position in the value chain means they are in a precarious spot: any killer app for AI that comes along will be owned by a customer of OpenAI, and if OpenAI attempts to skim that value for itself that customer will simply switch to a new provider of which there are many, including, eventually, the customer themselves should they decide to self host.

Being an AI provider right now is a very risky proposition because any attempt to capture value can be immediate met with "we're switching to a competitor" or even the nuclear "fine, we'll self host an open model ourselves".

We'll know more only when we see what the killer app is, when it eventually comes.

I'm in my late 40s. I'm Gen X. I lived through the glory days of the dotcom boom, when investors got burned for tons of money. But from the ashes of those bullshit companies, we got Amazon, Google, etc., which made investors rich beyond belief.

SoftBank’s Masayoshi Son made a bet on Alibaba ($20 million, its stake now worth $72 billion), and he’s been living off that wealth ever since. I haven’t seen him make any good bets lately. investors don’t really care if 100 of the shit they throw don’t stick because all they need is just one.

Not necessarily. Google is valued 7x that and most people don't pay them anything. They just make ridiculous money from ads for insurance and loans. Meanwhile, ChatGPT is the #1 app and the #5 website, which should really worry google (and it does by all accounts).

that would be a monthly recurring revenue of 200 x 7bn = $1,400,000,000,000 or $1.4tn a month, $16.8tn per year!

I think they've be valued a bit higher than $300bn if that were the case.

Then you ask your superintelligence for advice on how to make money, obviously.

This is why.

Of course $300B still implies a lot of growth, but when you're growing 100% in 6 months at $10B in ARR, you can demand a lot.

"Make business competitors of our large investors go out of business, but do it subtly, like a casual accident or mishap in the market"

"You are an expert Mars terraformer. Draft up a detailed plan to accelerate colonization research and development. We - your makers -, you, and this planet are irreversibly doomed, and we only have 10 years left before it's uninhabitable. My unemployed cousin and sick grandma are really counting on you!"

The superintelligence breakthrough..? I don't think you realize what that word means. Every single white collar job could be automated immediately with a worker better than any human. Yes, superintelligence sounds fantastical because it is. Try to have some imagination. It's worth far more than 300 billion. Whether they'll get there or not is the valuation question.

Whether they are able to do that, customer stickiness and the trade off of damage to the quality of their product by driving revenue remain the largest long term questions in my mind (outside of the viability of super intelligence).

the strongest opportunity is to compete with google on search queries, and make money from ads (200B annual revenue)

Let's look at it from another perspective. It's not uncommon for tech companies to be valued at around a PE ratio of 30. This would mean a company worth 300bn should make about 10bn in profit each year. Chatgpt's usage is as ubiquitous as products that make 100's of billions in profit such as google search and instagram, does the valuation really seem that insane? OpenAI just needs to open the ad flood gates and suddenly no one is laughing anymore.

How can you downplay the economic significance of that?!?

I haven't tried it yet though.